When Broker-Dealer Supervisory Failures Don’t Protect Investors’ Best Interests
Our Trusted Brokerage Firm Negligence Lawyers May Be Able To Help You Pursue Damages
The Financial Industry Regulatory Authority (FINRA) is ordering two broker-dealers to pay penalties for compliance failures related to Regulation Best Interest (Reg BI). According to the self-regulatory organization (SRO), DMK Advisor Group and Harpeth Securities did not have the necessary policies and procedures to make sure that their registered representatives abided by this standard of conduct. As a result, both broker-dealers, which also were found to have engaged in compliance failures related to Form CRS, must each pay a $35K fine. Form CRS delineates its services, conflicts, fees, disciplinary history, and other information to customers. The two financial firms did not deny or admit to FINRA’s findings.
Regulation Best Interest sets up a standard of conduct that brokerage firms and their associated persons must adhere to when recommending any investment, securities transaction, or investing strategy to retail investors. In other words, they must only make investment recommendations that are in the best interests of a customer and without placing the firm’s best interests first.
The actions by FINRA are part of regulators’ efforts to crack down on those who fail to abide by Reg BI. This includes the SRO’s recent expulsion of SW Financial for multiple Reg BI violations. Also, in June 2022, the US Securities and Exchange Commission (SEC) charged Western International Securities and five of its brokers with Regulation Best Interest violations for selling $13.3M of GWG L Bonds to retirees and other retail customers. GWG Holdings is now accused of operating a more than $1.6B Ponzi Scam.
How Can Our Seasoned Brokerage Firm Negligence Lawyers Help?
Brokerage firms have an obligation to not only properly oversee the activities of their financial advisors in customers’ accounts, but they also must have the proper guidelines, rules, and procedures in place to ensure compliance with rules like Regulation Best Interest. When a lack of the necessary policies and protocols enables broker misconduct or negligence, a broker-dealer may be held liable if serious investor losses result.
Previous to the implementation of Reg BI in 2019, brokerage firms were only held up to a suitability standard, which obligates broker-dealers to conduct reasonable due diligence to make sure a recommendation is appropriate for a customer given certain specific factors, including risk tolerance level, age, financial goals, current financial situation, and more. Unfortunately, lax supervision by financial firms all too often leads to significant investor losses whether due to Reg BI violations, unsuitability, churning, overconcentration, misrepresentations and omissions, or other broker misconduct. If you are wondering whether you have grounds for a failure to supervise a lawsuit against your brokerage firm, Shepherd Smith Edwards and Kantas (investorlawyers.com) can help you explore your legal options.
For over 30 years, we’ve gone after broker-dealers all over the US to help investors pursue damages for the losses sustained due to broker fraud or negligence. Even if a brokerage firm was not aware of their financial advisor’s misconduct you still may be able to hold the firm liable.
How To Contact Our Team of Brokerage Firm Negligence Lawyers :
When you work with our savvy failure to supervise law firm, you are hiring knowledgeable attorneys who have a combined over a century’s worth of experience in securities law and the securities industry. We are exclusively focused on representing investors against broker-dealers and investment advisers. Should we agree to work together, we can file your broker fraud lawsuit, represent you during the arbitration proceedings, and protect your legal rights. More than 90% of our clients have received full or partial financial recovery with our help.
Call the team of Brokerage Firm Negligence Lawyers at SSEK at (800) 259-9010 today to request your free, no-obligation case consultation.